Robust gains for home sales

Related

The market for existing homes made healthy gains in the first two weeks of October -- then again, this is compared to the angst-ridden days of last October.

According to the Toronto Real Estate Board, GTA realtors reported 3,631 sales of existing homes in the first two weeks of this month. This represents a 34% jump, compared with the same period last year. Buyers were obliged to dig deeper into their pockets, as the average sales price rose to $414,479, a 17% increase for the first two weeks of October 2008.

"While demand for existing homes has remained strong, it is important to recognize the context of current statistics," says TREB president Tom Lebour in a release. "We are now making comparisons to the fall of 2008 when we experienced a marked decline in sales and average price."

Taking the total sales for 2009 thus far, numbers are up to 69,964, a more modest 6% increase on the same period last year. The average price for year-to-date sales in 2009 is $389,687, a 2% rise on last year's number.

"Tight market conditions throughout the GTA will continue to exert upward pressure on home prices in the fourth quarter," says Jason Mercer, TREB's senior manager of market analysis in a release. "Expect more listings in 2010, as homeowners react to the price gains experienced in the second half of 2009."

While the GTA market strengthened, it was a different case for housing activity south of the border.

According to the U.S. Census Bureau, building permits decreased to a seasonally adjusted annual rate of 573,000 in September -- a 1.2% drop on the previous month and a hefty 28.9% dip for last September.

"Building permits are down in two of the past three months [largely due to weakness in multiples], and the number of units under construction continues to decline," says Sal Guatieri, senior economist at BMO Capital Markets. "This could reflect nervousness

ahead of the looming Nov. 30 deadline for the first-time homebuyers tax credit, though the administration has said that it is considering a proposal to extend the credit. The bigger concern likely stems from rising foreclosures in the resale market amid ongoing job losses."

The U.S. Census Bureau reported that housing starts in September reached a seasonally adjusted annual rate of 590,000. This is just 0.5% above the revised August numbers and a marked 28.2% down on the same month last year.

"More broadly, the sector is stuck in the range of 500,000 to 600,000 with little immediate prospect of a robust exit. While U.S. home prices are finally beginning to rise (with plenty of positive implications for the U.S. economy), it remains considerably less certain whether this will translate into additional construction due to a substantial overhang of inventories," notes Eric Lascelles, chief economics and rates strategist at TD Securities. "And even as the official inventories are whittled down, it seems that banks and builders may be holding on to shadow inventories that will preclude the need for serious construction activity for quite some time."

The traditionally more stable single-family component of the housing starts suggested that there might be a more positive underlying trend.

"Tempering the disappointment somewhat is that single-unit construction, which accounts for four-fifths of the total and is a more reliable gauge of underlying trends than the overall figure, rose for the sixth time in seven months, and by a solid 3.9% in September," notes Mr. Guatieri. "It is up a whopping 40% from earlier lows and down just 9% from a year earlier. That said, the near-term outlook remains iffy, as home-builder sentiment dipped unexpectedly in October."

According to the National Association of Home Builders, builder confidence in the market for new single-family homes fell one point to 18 in October. This represented the first decline in the index since June.

Comments

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.

Almost Done!

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.